THE AIR SEVERE THUNDERSTORM MODEL for AUSTRALIA in Australia, Severe Thunderstorms Occur More Frequently and Cost More Annually Than Any Other Atmospheric Peril

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THE AIR SEVERE THUNDERSTORM MODEL FOR AUSTRALIA In Australia, severe thunderstorms occur more frequently and cost more annually than any other atmospheric peril. The industry’s first comprehensive severe thunderstorm model for the country, the AIR Severe Thunderstorm Model for Australia explicitly models all three sub-perils—hail, tornado, and straight-line wind—to help companies manage the risk. HAIL Hailstorm outbreaks can last for several daysHailstorm outbreaks and territories, multiple states and affect may last for justbut individual swaths highly localizedminutes and devastate toareas. AIR uses advanced algorithms microeventscreate realistic groupings of hail and time.that are close together in space The resulting stochastic event footprints thanare based on observation data rather artificially imposed grid sizes, providing of lossusers with far more realistic views probabilities. Tornado Days per Year <0.1 0.1 to 0.2 0.2 to 0.3 0.3 to 0.4 0.4 to 0.5 0.5 to 0.6 >0.6

Annual spatial distribution for tornado days in Australia. (Source: AIR) TORNADO Because of the scarcity of historical recordsBecause of the scarcity biases in reporting, AIRfor tornadoes and techniqueemploys a “smart-smoothing” data withto augment observation atmospheric conditionsinformation about thunderstormconducive to a severe wind shear, outbreak, including instability, temperature, and moisture. ofSmart-smoothing allows for simulation in theplausible events where none appear a morehistorical record, giving companies accurate view of their tornado risk. A shelf cloud front rolling over Sydney Harbour. STRAIGHT-LINE WIND The most frequent yet often overlookedThe most frequent wind, which cansub-peril is straight-line losses. Damage fromcause significant is often mistakenlystraight-line wind tornadoes, evenattributed to weak of cyclonic windwithout the presence vortex.motion or a central shiftAs seasons change and temperatures windfrom warm to cool, straight-line The AIR Severe events shift regionally. appliesThunderstorm Model for Australia severity indexes to capture thisdifferent the regionseasonal variability throughout to provide more robust loss estimations. Severe property damage from straight-line winds. VULNERABILITY The vulnerability module of the AIR SevereThe vulnerability for Australia featuresThunderstorm Model functions for hail,separate damage wind to capturetornado, and straight-line on buildings, contents,their unique impacts complex industrialautomobiles, and as business interruptionfacilities, as well losses. usingDamage functions are formulated data from published literature and incorporate the regional and temporal codes.variations in Australian building They are then validated using claims, historical loss data, and results from damage surveys. A panoramic view of Sydney, Australia, and the landmark Sydney Opera House. EXPOSURE The greatest concentrations of exposure are of exposure concentrations The greatest cities of Adelaide,the densely populated Melbourne, Perth, andBrisbane, Canberra, The number of insurable exposures Sydney. as development expandscontinues to grow areas, andinto previously unpopulated increasing as propertyloss potential is rise.replacement values forThe AIR Severe Thunderstorm Model Australia incorporates a highly detailed (1-km grid resolution) industry exposure on riskdatabase that contains information counts, replacement values, occupancies, and construction types of insurable properties, including industrial facilities. SIGNIFICANT HISTORICAL SEVERE THUNDERSTORM EVENTS

Year 1973 1985 1990 1999 2008 2010 2010 2014

Event Brisbane Tornado Brisbane Storm Sydney Storm Sydney Hailstorm Brisbane Storm Melbourne Storm Perth Storm Brisbane Storm

Damage Type Tornado Hail/Straight-Line Hail/Straight-Line Hail Hail/Straight-Line Wind Hail/Straight-Line Hail/Straight-Line Hail/Straight-Line Wind Wind Wind Wind Wind Insured Losses 105 2,201 1,384 4,582 379 1,237 1,087 1,379 (AUD Millions*)

*Losses are trended to 2015 dollars. (Data Source: Insurance Council of Australia) SIGNIFICANT HISTORICAL SEVERE THUNDERSTORM EVENTS

Year 1973 1985 1990 1999 2008 2010 2010 2014

Event Brisbane Tornado Brisbane Storm Sydney Storm Sydney Hailstorm Brisbane Storm Melbourne Storm Perth Storm Brisbane Storm

*Losses are trended to 2015 dollars. (Data Source: Insurance Council of Australia) WHAT’S YOUR RISK? Where are your exposure concentrations relative This model will provide the insurance industry to areas of high hazard risk? Based on detailed with the most advanced view of hail, tornado, modeling of your portfolio, how likely are and straight-line wind risk in Australia. different levels of loss? Combined with AIR’s Touchstone® catastrophe risk management platform, the AIR Severe To help you answer these questions and truly own Thunderstorm Model for Australia is the most your risk, AIR is releasing a severe thunderstorm advanced tool for assessing severe thunderstorm model for Australia in 2017. risk in the Australian insurance market. ABOUT AIR WORLDWIDE AIR Worldwide (AIR) provides catastrophe risk modeling solutions that make individuals, businesses, and society more resilient. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism globally. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk Analytics (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com. www.air-worldwide.com ©2016 AIR Worldwide